In this article we will look at how the UK economy has performed over the past year and
put this in the context of events in the world economy. This year has seen lower than
average growth in the UK economy. In the short term this may cause problems for the
government’s fiscal strategy in that tax receipts look set to fall at a time when
expenditure is planned to increase. However, there are signs that the worst of the
slowdown may be over and that output growth will pick up in the coming year. Inflation
has remained below its target rate throughout the year and unemployment has continued
to fall.